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Del Johnson
@DelJohnsonVC
The Father of Modern Venture Capital. VC, Angel, LP. prev:
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@Oracle
,
@ucberkeley
,
@Columbialaw
. Follow to learn how venture capital *actually* works.
New York, NYJoined September 2012
3,150 Following
21.9K Followers

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Del Johnson
@DelJohnsonVC
Venture capital diversity initiatives have completely failed women & minority founders, as well as the non-elite & those from disfavored regions Too often, VC reformers push for "community rooted" solutions that inflame the problem rather than solve it
theinformation.com
The Relationship Model Is Killing Venture Capital
The social and racial homogeneity of the venture capital industry has long been a source of frustration for entrepreneurs and investors alike. In recent years, this frustration has boiled over into a...
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Del Johnson
@DelJohnsonVC
"Exhibiting competence can cause VCs and LPs NOT to invest in you" is EXACTLY what I'm saying. And the adverse selection in innovation markets that results from this phenomenon is probably the most important problem in finance. news.stanford.edu/2019/08/12/rac
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Sumorwuo Zaza
@SKZaza
Replying to @DelJohnsonVC
Wow this is deep. And actually really upsetting. Are you saying exhibiting competence can cause people to *not* invest in you? Can you share the study link?
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Del Johnson Retweeted
Del Johnson
@DelJohnsonVC
If you want to impress a VC, you have to do things that get the VC more money from checkedout LPs that have no idea what they're doing. What impresses clueless rich people? Elite signals like where you went to school or previously worked, not your ability to select good companies
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Del Johnson
@DelJohnsonVC
Replying to @Mat_Sherman and @Subconscious_VC
Oh no, you're still behind. The "secret" is that the better you are at finding good companies, the less VCs' will want to support you because you are a competitive threat to their patronage scheme.
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Del Johnson Retweeted
Charlotte Alter
@CharlotteAlter
Effective Altruism— the movement dedicated to doing good better— has been under scrutiny since the fall of SBF. But seven women told me that EA also has a hostile culture for women, one in which sexual misconduct is tolerated or rationalized away.
time.com
Effective Altruism Has a Hostile Culture for Women, Critics Say
Seven women connected to effective altruism tell TIME they experienced harassment and worse within the community
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Del Johnson Retweeted
Paul Portesi
@PaulPortesi
Most want to say things that make them sound smart. That's linear & one-way street. The goal is to say things to get information back from the conversation, eg what's their perspective. Don't just give information. Say things to get information back not just give information.
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Del Johnson
@DelJohnsonVC
I would advise that next time someone tries to use my arguments in order to play "gotcha," they have a clear understanding of the concepts I am talking about. Generally VC would benefit from increased transparency in many areas, but what that looks like is a complex issue.
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Del Johnson
@DelJohnsonVC
Increased transparency might mean an LP needs to report potentially conflicting fund investments (or all investments) to the gov or outside agency. Or a VC has to explicitly spell out it's investment process in detail. It doesn't mean twitter use bob1083820 gets total visibility.
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Del Johnson
@DelJohnsonVC
Transparency simply means that the people or organizations that need to know something, are able to access the information. It doesn't mean that any person anywhere has full access to something, that's ridiculous in a private asset.
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Del Johnson
@DelJohnsonVC
Someone was trying to distract from a cogent point I was making about investor bias, anticompetitive behaviors and libelous conduct from VCs' by claiming that I am for some sort of full VC "transparency. I didn't take the bait at the time but what I mean by transparency is clear:
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Del Johnson
@DelJohnsonVC
Access and transparency are two interlinked concepts in a lot of peoples' minds that must be decoupled if we want to move the needle in VC. I can't and won't always be transparent with what I'm doing, but I will make sure that there is openness and access.
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Del Johnson
@DelJohnsonVC
Anyway, the tl:dr of this thread and maybe my entire account? is that you have really bad priors about how VC works. Like really bad, I can't overstate how bad, bad. And as a result you are allowing these dudes to rob pensioners and constrict innovation.
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Del Johnson
@DelJohnsonVC
Does the fact your paper sales company wants to "make money" stop it from being run by the founder's grandson who comes in every Thursday at 2:00pm, pats you on the back, goes "working hard or hardly working?" laughs, then goes back to golf?
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Del Johnson
@DelJohnsonVC
Unless your industry has a combine and a draft, I'm going to go out on a limb and say, no. Much more likely you work at a place besieged by office politics, nepotism and managerial incompetence. And you think an opaque, lightly regulated industry like VC is any different, why?
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Del Johnson
@DelJohnsonVC
A lot of people, especially outsiders, come into the industry with this mistaken view that the fact VCs want to make money means they want to invest in and hire the most meritorious people. But that assumes merit gets VCs the most money. Is that how things work at your job?
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Del Johnson
@DelJohnsonVC
If you want to impress a VC, you have to do things that get the VC more money from checkedout LPs that have no idea what they're doing. What impresses clueless rich people? Elite signals like where you went to school or previously worked, not your ability to select good companies
Quote Tweet
Del Johnson
@DelJohnsonVC
Replying to @Mat_Sherman and @Subconscious_VC
Oh no, you're still behind. The "secret" is that the better you are at finding good companies, the less VCs' will want to support you because you are a competitive threat to their patronage scheme.
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Del Johnson
@DelJohnsonVC
Specifically, when asked to rate successful Black male-led investment teams, white LPs experienced "status anxiety and feelings of professional inadequacy." And this anxiety led them to choose less competent Black investors who reinforced their perception of the status quo.
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Del Johnson
@DelJohnsonVC
There is data to suggest that biased decision making leads both established VCs, and the Limited Partners who fund VCs to routinely fund the least competent new and diverse VCs.
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Del Johnson
@DelJohnsonVC
Perhaps the reason we see such weak, ineffective and contradictory reform strategies is because the new VC managers with good ideas never make it into the industry in the first place. Perhaps "win-win" strategies are ubiquitous because they are nonthreatening to established VCs'
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Del Johnson
@DelJohnsonVC
Pursuing deep financial "enmeshment" with VC incumbents makes little sense given reformers' own logic. If VC is rife with bias it would logically follow that propping up the established VCs who perpetuate that bias and co-signing their strategies would be blatantly contradictory
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Del Johnson Retweeted
Del Johnson
@DelJohnsonVC
Diversity is necessary for progress, but not sufficient. Pursuing conventional structures while attempting only to change the faces behind them will lead to the same fraudulent, econ harmful behaviors reflected in the majority. A female, Black, or Hispanic SBF is not progress.
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Del Johnson Retweeted
@LikePlaydating_
@LikePlaydating_
Don't scroll by. Read this please.🙏
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Del Johnson
@DelJohnsonVC
Instead of playing nice w biased incumbents, effective reform strategies must correctly see incumbent VCs and their outmoded selection processes as a major impediment to both financial returns and social progress. They must begin to see established VCs as competitors, not friends
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Del Johnson Retweeted
ChaUntelle JN Lewis (She/Her)
@cjnlewis_
The tussling part took me out Jasiel because I truly believe this is the year folks are gonna be agreeing with Del way too much! 🤭🙃
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Jasiel Martin-Odoom
@Jasielinvests
I know y’all like to tussle with Del on here but VCs, founders or just people who like reading my threads about gender-lens investing, should read this, fact check him to form your own views & let’s build an asset class that does more than fund another SBF or Neumann or Holmes twitter.com/DelJohnsonVC/s…
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Del Johnson Retweeted
Jasiel Martin-Odoom
@Jasielinvests
I know y’all like to tussle with Del on here but VCs, founders or just people who like reading my threads about gender-lens investing, should read this, fact check him to form your own views & let’s build an asset class that does more than fund another SBF or Neumann or Holmes
Quote Tweet
Del Johnson
@DelJohnsonVC
Venture capital diversity initiatives have completely failed women & minority founders, as well as the non-elite & those from disfavored regions Too often, VC reformers push for "community rooted" solutions that inflame the problem rather than solve it theinformation.com/articles/the-r
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Del Johnson
@DelJohnsonVC
"Deference to existing venture capitalists not only cedes market power to actors known to spread harmful biases, but gives those same actors undue power to dictate how or when reform can take place."
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Del Johnson
@DelJohnsonVC
Instead of playing nice w biased incumbents, effective reform strategies must correctly see incumbent VCs and their outmoded selection processes as a major impediment to both financial returns and social progress. They must begin to see established VCs as competitors, not friends
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Del Johnson
@DelJohnsonVC
As the researchers note, these sorts of win-win diversity strategies “not only place an undue burden on female investors, but may also undermine the long-term success of female entrepreneurs."
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Del Johnson
@DelJohnsonVC
The problem is twofold: collaborative diversity initiatives do more harm than good b/c they both fail to identify the source of the friction (downstream), & b/c by entangling themselves w incumbents, reformers lend credibility to male incumbents and biased selection methodologies
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Del Johnson
@DelJohnsonVC
The study found that female founders who received early support from female investors were half as likely to secure follow-on as those who received early investment from male investors, b/c downstream male investors routinely discounted the competence of female-funded founders
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Del Johnson
@DelJohnsonVC
Investor groups like
@coalitionvc
as well as many diversity VC funds believe collaborating with incumbents to get women on cap tables is a viable strategy to fixing diversity, but a French study shows collaboration w incumbents leads to fewer female founders receiving investment.
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Del Johnson
@DelJohnsonVC
Rather than taking a disruptive and competitive posture toward VC incumbents, “win-win” strategies frame established VCs not as competitors, but collaborators. This approach fails to consider how incumbents perpetuate entrenched biases and inefficiencies built into the VC model
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Del Johnson
@DelJohnsonVC
Diversity minded VC funds and orgs often think the best path to increase diversity is to pursue partnerships with established VCs. The research however shows that these "win-win" models unwittingly end up decreasing diversity and restricting the entry of disruptive outsiders.
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